TSM a contrarian play on Ukraine conflict?
- Alex Roseland
Great entry point on TSM (Taiwan Semiconductor) for a swing trade or long term hold. It has a positive divergence of price moving down to a key support level while sentiment, estimates, ratings, etc. are all pointing up to the sky. Ukraine has already turned into a disaster for Putin which, he may keep fighting, he may gain control of Kyiv but the cost is far higher than he thought. This will cast a very negative light on any aspirations China had of easily snatching up Taiwan. Western countries have shown a far higher resolve to unify and push back on an authoritarian invasion than expected. Most analysts didn't think Russia would be removed from SWIFT. Germany and previously neutral countries are sending sophisticated weaponry. Large scale protests across the globe. Instead of a split among NATO countries, more solidarity has emerged. All of this is very positive for Taiwan. Russia may be restricted from buying their semiconductors but that wasn't a significant revenue segment for them. There are still remaining shortages and supply chain issues that support price and demand. The Ukraine invasion also reduced probabilities in the Fed rate hike projections, which will be supportive of demand. This looks like a heavily asymmetric bet to us.